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Liz Weston

Tuesday’s need-to-know money news

February 23, 2021 By Liz Weston

Today’s top story: The latest trends in home renovations and how to pay for them. Also in the news: 4 tips for starting or restarting a business in tough times, student loan forgiveness scams, and key 2021 financial deadlines to add to your calendar.

The latest trends in home renovations—and how to pay for them
Don’t worry, the open floor plan isn’t dead

4 Tips for Starting or Reinventing a Business in Tough Times
Entrepreneurs should adapt to market changes, fix problems that bother them and tweak existing strategies.

If a stranger offers you student loan forgiveness, hang up
Scammers are everywhere.

Add These Key 2021 Financial Deadlines to Your Calendar Now
Helpful reminders.

Filed Under: Liz's Blog Tagged With: business tips, financial deadlines, home renovations, student loan scams

Monday’s need-to-know money news

February 22, 2021 By Liz Weston

Today’s top story: How to get the most home insurance help after a winter storm. Also in the news: A new episode of the Smart Money podcast on filing your taxes early and tapping into your home equity, 8 ways to take your credit card rewards to the next level in 2021, and how to get relief with your federally backed mortgages.

How to Get the Most Home Insurance Help After a Winter Storm
Talking to your insurer and documenting everything will help you manage and recover from serious storm damage.

Smart Money Podcast: Filing Taxes Early and Tapping Home Equity
Why you probably want to file your taxes sooner rather than later.

8 Ways to Take Your Credit Card Rewards to the Next Level in 2021
With some extra steps — like an inventory of your wallet, a chat with your issuer, and a willingness to track and stack — you can squeeze more value from points and miles.

How to Get Relief With Your Federally Backed Mortgages
There’s a new extension.

Filed Under: Liz's Blog Tagged With: credit card rewards, homeowners insurance, mortgage relief, Smart Money podcast, Taxes, winter storm

Q&A: Don’t rush to start collecting Social Security

February 22, 2021 By Liz Weston

Dear Liz: Having read your advice on Social Security numerous times, I’m having a heck of a time encouraging a friend who reached full retirement age last year to start collecting her benefits. She said her Social Security isn’t enough to live on and she needs to work two more years before collecting. She said if she waits to apply that it would increase her Social Security by $400 a month. I’ve informed her that she can both collect and continue to work without penalty because she has reached full retirement age. She also would still get an annual increase based on her earnings, in addition to the annual cost-of-living increase. She won’t let me know how much her Social Security would be now, and I haven’t asked, but I’ve told her this is extra money she could invest.

Answer: Are you sure you were reading this column?

Copious research shows that most people are better off waiting as long as possible to file for Social Security. Given life expectancies at 65, most who make it that far will live beyond the break-even age where the larger checks they’ll get will more than offset the smaller ones they pass up.

Waiting is particularly important for the higher earner in a couple, since that determines what the survivor gets to live on. Waiting is also important for single people, since they don’t have a partner’s income to help. Single women have an especially high risk of finishing their days in poverty, which means maximizing their Social Security is usually the right call.

Besides, there’s no risk-free investment that would guarantee her an 8% annual return. That’s what she’s getting by waiting to start her Social Security benefit (at least until age 70, when the benefit maxes out). She might be able to generate similar returns with stock market investments, but she also could lose her shirt.

Something else to consider: Benefits are based on our 35 highest-earning years. If she’s making more now than she did in one of those previous years, she could be boosting her benefit even more by continuing to work. People who took time off to raise families or who had a history of low wages or part-time work often see a bigger benefit by continuing to work as well as waiting to apply.

Filed Under: Q&A, Social Security Tagged With: q&a, Social Security

Q&A: How much debt can you afford to pay each month? Put it in perspective

February 22, 2021 By Liz Weston

Dear Liz: I’m paying down credit card debts. At what ratio of debt to income would you consider my personal finances healthy?

Answer: The healthiest level of credit card debt is none. Credit card interest rates tend to be high and variable, which makes this kind of debt toxic to your financial health. Congratulations for making progress on getting rid of yours.

There are a number of measures you can use to judge whether an appropriate amount of your monthly income goes to debt payments. Among the most common:

◆ Traditionally, mortgage lenders preferred home loan payments to be 28% or less of your gross monthly income and total debt payments, including mortgage, to be 36% or less.

◆ Debt payments, including mortgages, that exceed 40% of gross monthly can be an indication of financial distress, according to the Federal Reserve.

◆ Under the 50/30/20 budget, all your must-have expenses — including housing, utilities, transportation, insurance and minimum loan payments — would be 50% or less of your after-tax income (your gross income minus income and payroll taxes). That leaves 30% for wants and 20% for savings and extra payments on debt. If a loan payment fits under the 50% limit with all your other must-haves, then it may be considered affordable.

You typically don’t need to rush to pay off lower-rate, potentially tax-deductible debt such as mortgages or student loans. Still, you’ll probably want to have all your debts paid off by retirement so you aren’t draining your nest egg to make the payments.

Speaking of retirement, are you saving enough for that goal? Do you have a sufficient emergency fund? Are you adequately insured? Are you able to enjoy your life without excessive stress about money? Financial health includes all those components in addition to paying down debt.

Filed Under: Credit & Debt, Q&A Tagged With: credit card debt, q&a

Friday’s need-to-know money news

February 19, 2021 By Liz Weston

Today’s top story: Turn your quarantine clutter into money. Also in the news: 10 digital banking services changing up checking, what to do when you’re a victim of debit card fraud, and how your stimulus checks will affect your taxes.

Turn Your Quarantine Clutter Into Money
What to do if you went a little overboard.

10 Digital Banking Services Changing Up Checking
New banking players are redefining what a checking account looks like.

Debit Card Fraud? Act Fast to Protect Your Money
When dealing with debit card fraud, get in touch with your bank quickly to protect your account.

How Will Stimulus Checks Affect My Taxes?
Find out if you have to pay taxes on those checks.

Filed Under: Liz's Blog Tagged With: banking, debit card fraud, quarantine clutter, stimulus checks, Taxes

Thursday’s need-to-know money news

February 18, 2021 By Liz Weston

Today’s top story: Why you may not want to be an executor. Also in the news: 5 ways to foil catalytic converter thieves, 3 money habits to carry forward from the pandemic era, and how to avoid fees when paying your taxes.

Why You May Not Want to Be an Executor
Settling someone’s estate can be time-consuming and difficult, plus you could be sued.

5 Ways to Foil Catalytic Converter Thieves
Catalytic converter thefts have soared during the pandemic.

3 Money Habits to Carry Forward From the Pandemic Era
According to a new survey, 78% of Americans report that the pandemic spurred them to take financial action.

How to Avoid Fees When Paying Your Taxes
Some options are better and cheaper than others.

Filed Under: Liz's Blog Tagged With: catalytic converter thieves, Estate Planning, executor, fees, money habits, pandemic, Taxes

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